Uber Loses at Least $1.2B in First Half of 2016(bloomberg.com) |
Uber Loses at Least $1.2B in First Half of 2016(bloomberg.com) |
In my mind, the situation is a little more suspect if they are subsidizing standard rides in the market. However, at this point, there are two major competitors in almost every US market, Lyft and Uber, so they are making the market between them. Whether or not either of them is losing money, if they raised their prices at this point, they would suffer a precipitous drop in market share. Sooner or later, they'll find an equilibrium. Taxi companies can choose to ante up and participate in the market, or fold and get out -- that's how it goes. From a competitive standpoint, it takes two to tango, it doesn't take three.
This is false. The 'exceptions' are the norm.
It's all but tautological that monopolies can only be established in markets in which there are meaningful barriers to entry.
Those barriers are seldom legal, and legal barriers are of arguably limited value.
The only way for a 'start up' to 'disrupt' is if they are extremely well funded relative to the monopoly holder's investment in the market.
As noted elsewhere today, that is precisely the business model of Uber/Lyft/AirBnB: use vast amounts of capital to attempt to break into locked markets, while unprofitable for years and years.
Absent funding at that level, monopolies that level are largely unassailable once established.
The pace of breaking them and evolving the market in the interest of consumers is thus measured on a very very long timescale, during which consumers take it in the shorts.
(Witness taxi service in SF pre-Uber/Lyft)
I'm not sure how relevant it is to ride-sharing, because the industry is not particularly vital to the economy, and the barrier to entry is low.
Where it becomes a concern is in crucial industrial infrastructure. Over the long term, China, for example, can dump cheap, government subsidized steel in the US, obliterating the domestic steel industry. 40 years down the road there's nowhere else to buy steel, which is bad both economically and militarily.
>the U.S. Supreme Court has set high hurdles to antitrust claims based on a predatory pricing theory. The Court requires plaintiffs to show a likelihood that the pricing practices will affect not only rivals but also competition in the market as a whole
Heck, if you buy Uber's logic, they don't actually compete with Taxi companies. Lyft is their only serious competitor, and both of them are losing a ton of money (arguably, but I'd like to see a court weigh in) because of Uber's irresponsible behavior.
Destroy all competitors by dumping. This is financed through investment and disregarding all regulation (who needs background checks for taxi drivers anyway?)
AirBnB put about $10M in SF fighting regulation in the last election. Smart money.
Their problem today is that despite their success in that round, the fiction that their business is about a 'share economy' is unraveling as details emerge from third parties on their actual revenue stream:
https://fivethirtyeight.com/features/airbnb-probably-isnt-dr...
I look forward to regulation catching them.
The whole car sharing is marketing bull, so that they can justify dodging regulation and dumping prices.
For Webvan, it was yes.
The answer for Uber is no, at least in the short term.
a) Uber would stop subsidizing drivers, and then would overnight be cash flow positive
b) The driver subsidies probably wouldn't matter anymore, because if Uber's funding ran out, so would that of their competitors. Lyft is already on the brink (source: http://www.nytimes.com/2016/08/20/technology/lyft-is-said-to...)
c) they'd exit markets where they were burning cash (e.g. China, which already happened)
Long term, no idea.
(To be fair, airlines pay humans... as employees... unionized.)
I understand the rationale for spending $2 of marketing/whatever to buy $1 of sales. Grab market share. Step 3, profit like it's 1999. We'll see.
Q: How do you make a small fortune in farming?
A: You start out with a large one.
How do you restore a <classic car of your choice> so it is worth $100,000?
Buy one with good bones for $20K and spend $200,000 fixing it up.
>In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said.
Guess that didn't last long.
[1] http://uk.businessinsider.com/uber-says-its-profitable-in-th...
[2] http://www.bloomberg.com/news/articles/2016-04-14/lyft-is-ga...
Depending on who you're talking to, however, that can mean things like "it costs less to acquire a new customer than they're likely to spend", or that excluding things like salaries, rent, taxes and such, they're profitable.
In this case I'd guess it means that Uber pays less to drivers than the user pays them, and ignore everything else (marketing, salaries to employees, taxes, etc).
And it will be a few decades before we see anything decent.
Name one physical consumer product that has garnered them loyal customers? Apple on the other hand...
If I take a $20 uber ride, uber gets $4 at a marginal cost of close to zero.
They are selling other people's time, it seems like a flawless business model if you're winning the game..
They're essentially loss-leading until a few things happen:
- fuel prices drop away
- self-driving cars are available
- their competitors die outIt's a shell game. Uber may not call it's drivers employees, it may not claim ownership of the vehicles, but those drivers and vehicles represent overhead all the same. At the end of the day, the cars must be maintained. High quality drivers must be recruited and paid. If they aren't, Uber goes out of business.
At this point Uber is looking suspiciously like a large traditional company that provides a taxi service, with a nice app. Maybe a potentially profitable one. But worth $60 billion? Nope.
- SMS (read, send, receive)
- Photos/media/files (read, modify, delete SD card contents)
- WiFi connection information
- Full network access
- View network connections
- Read Google service configuration
- Modify system settings
Move along.
Also looks like the large losses are coming from subsidizing drivers, not R&D.
They are already doing that: http://qz.com/656104/a-fleet-of-trucks-just-drove-themselves...
Uber is just a service provider. They don't build anything. Anyone can be a service provider with enough funding.
If they pulled out of a bunch of markets (why is Uber wasting its time in places like Japan where taxis are basically fine?), then they could no longer justify their valuation.
Their prices are going to go pretty high up, meaning they'll only survive in places where taxis are super awful (so, basically the US).
All that stock they've handed out would start dropping like a rock in the private valuations of the institutional holders, I bet some loan conditions will trigger, and they're going to suffer quite a bit. Not to mention the talent exodus.
It's like austerity. If your company is suffering due to a lack of growth to meet ambitions, is cutting costs going to make growth go faster or slower?
That said, I think Uber will figure something out, even if it ends up not hitting its goals.
Clearly that's the profitable long term strategy. A lot of people are flabbergasted that Uber seems to be burning cash for a no-expense, non-capital intensive operation. But if you look at it as them using the funding to:
1) own the market, mindshare -- driver subsidies
2) technology investment on logistics infrastructure to support a fleet of driverless cars
3) driverless car tech
4) lobbying for policy change ( on current taxi model, as well as future self driving model )
well then... the amount of funding and cash burning can somewhat be reasonable.
NOW, having said all of that. each one of those can are HUGE impediments to deal with for any new company, and yet they're trying to fight them almost simultaneously with huge question marks for policy and technology.
They might have a good strategy, but I feel like they might have been 5(10?) years too early. Time will tell...
That would take a few decades at the current pace. They are currently burning $2.4 billion/year. Lets say it takes 20 years for self driving cars to take over.
In that case it would take $40.8 billion in losses. All the best finding an investor who can give $40 billion and expect nothing in return for 20 years and have hope of recovering any of that even after 20 years.
The article says net revenue was $1.1 billion in Q2. Losses were "significantly" more than $750m. So we're talking a scenario where either they lose a lot of drivers or raise prices drastically. I'd expect a fair bit of damage either way, meaning still-lower revenues.
And they have very large fixed costs. Because they've already shifted most of their operating expenses to drivers, they have relatively little room to cut costs. They have a lot of expensive staff. They have a whole robot car research operation, which can't be cheap; Toyota has committed a billion dollars to figuring that out. So it's not clear to me that they'd be able to get to break-even.
I also think C is risky for them. Their valuation is "astronomical" by Bloomberg's standards; they're supposedly worth well more than, say, Ford. That's been based on a hard charge for global dominance, not just getting by in a few markets. And getting into the black might require big cuts in their marketing budget. If their growth numbers tank, their stock will lose the "dominate the market" premium.
So even if they could somehow get into the black, I'm not sure they would still be Uber at the end of it. They might not be the next Webvan, but they certainly could be the next Groupon.
Raising prices also means loosing costumers though. It seems like 25% is the targeted commission for uber. Probably even traditional taxis can stay under that.
But would the drivers still drive for Uber? If not, ruh roh.
and those drivers would walk to lyft.
It turns out that Amazon's bottom-line loss of $1.4 billion in 2000 included a host of non-cash items, all of which are conveniently being left out of Uber's EBITDA summation. These include: - $304 million of write-downs on other dot-com equity investments that weren't working out (Webvan, etc.) - $321 million amortization of goodwill (for full-fledged acquisitions that weren't looking so hot) - $25 million of stock-option expense - $200 million of impairment-related and other. (Jeff? Jeff ... what was that all about?)
Anyway, on an operating basis comparable to what Uber is reporting, Amazon's basic business probably ran a more modest deficit of about $400 million in 2000. In fact, Amazon made a point of saying that its book/music/video business was cash flow positive in 2000, though obviously not much else was.
This link (see p. 35) provides Amazon's full 2000 financials: http://media.corporate-ir.net/media_files/irol/97/97664/repo...
Uber may still bring everything into profitability, and its commitment to build market share no matter what is quite gutsy. But there's still a lot of work to be done.
Right now Uber is the "taxi service" but is building a world class transportation logistics platform. Noting the Otto acquisition and the self driving car investments you can track their path forward. If Uber can become for transportation what Amazon became for online sales then they have a pretty clear path to success. That being said I think Uber has savvier competition (Google, Apple even GM) who recognize them as a real threat where I think brick and mortar didn't realize Amazon's potential until it was too late.
On the other hand, losing money by handing out free stuff (cheap rides in this case) only makes sense if you want to either bankrupt your competitors or increase the awareness of your brand. Since Uber is at least not a complete unknown anymore at this point, all signs point towards the "driving out competitors" strategy. This might still be a viable business plan for Uber (though I don't see how to be honest), but certainly not one that should be cheered.
Uber did not start with plans to use autonomous vehicles and so far their plans amount to little more than "well, yeah, we'll shift to autonomous cars when they come." Well, yeah, so will everyone else on the planet. I don't think it's a coincidence that all of this came up around the time Uber started to lose money... when they were in the black all the talk was about the "rise of the freelancer economy."
It's likely that they're actually building up a war chest at this point, getting ready for extra spending on self-driving cars.
Their real risk is a company treating ride hailing as a million dollar company vs. a billion dollar company and running with ultra thin margins.
Wait until others (taxis, Lyft) are out of the market and raise prices?
Uber is similar, but anyone can set up a taxi service. Their own taxi drivers can even do it. Existing competitors can take over when the discounts disappear. It just doesn't make sense, it's like a pyramid with no foundation.
This almost feels like the Blu Ray and HD DVD war - yeah, Blu Ray beat HD DVD, but digital beat out both. At what point do self driving cars mean that Uber no longer has a competitive advantage in transportation? Aka if you remove the need to sign up drivers, then you're just competing on cost of a vehicle + overhead as the cost to a customer to switch from Uber to say 'FordNow!' is so low - I just download another app.
Uber is competing with all forms of transportation and to beat everyone there is a long time to try to wait and stay solvent for.
Facebook as one example also lost a lot of money (not $1.2b in six months mind you) for years before finally turning profitable. What was there for them to lose money on, social networks are just a couple servers, right? No, they were building out a massive foundation for the future. And now they're a money printing machine.
Because later when the subsidies are dropped and the product price rises, the demand will increase?
That's the idea at least.
Who else is threatening Uber in the US for example? Nobody. Who is going to spend billions to take the market away from Uber? Nobody.
Taxis? Car manufacturers?
>Who is going to spend billions to take the market away from Uber?
Doesn't look like it's a very profitable market Uber is operating in, so why should anyone spend billions to do so?
Yes, and that reason is anti-competitive supercharged intellectual property laws, plus anti-competitive obsolete computer access laws that can't tell the difference between a parcel of land on someone's farm and a network-attached server. Together, these laws make it virtually impossible to break the grip of ingrained players.
Instead of competing on the merit of their offering, big internet companies only need to take the basic steps that qualify them for those legal protections, like a non-sensical Terms of Use that, if read literally, would ban any access at all. These companies thus conspire to use the law to prevent the use of technical solutions to make switching costs reasonable for consumers.
(PayPal deals with an extra type of regulation, and even its founders have said it would be impossible to start a new PayPal today given the current state of financial regulation.)
We should consider how much money is being monopolized by copyright and ask ourselves, as a society, if that's really proportional to the value provided by granting said monopoly. I would say that copyright's constitutional purpose of "promoting progress in Science and the Arts" is actually being impeded by the massive, virtually unlimited (effectively "forever minus one day") monopoly that copyright now represents.
No, if they are actually colluding, that is an illegal combination in restraint of trade independent of whether that collusion involves dumping, and anti-trust law provides both private causes of action (for harmed competitors) and public causes of action (for the government) to address such collusion.
Anti monopoly laws are meant to protect consumers, NOT other businesses.
It is very hard for a company to get in legal trouble for price dumping, because as it turns out, price dumping in many cases is freaking awesome for consumers.
A driver does not make money if his Taxi is not running or it's running idle.
What Uber are currently doing is at least trying to minimize idle times.
Also, Uber win ultimately if all Taxi drivers in all the countries only affiliate with Uber (if Uber are so good at reducing their idle time)
But then, there is the aspect of self driving taxis. In that case Uber will win if Uber are the only operator and no competition is EVER allowed... which seems to be very difficult in the longer run. Mass-transit solutions will be more efficient than transporting only a single individual or maybe 3 or 4 at the same time ? So Uber may be the cost-effective somewhat luxury transit providers ?
But you lead me into thinking: In order to justify $60B valuation, I'd have expected them to blow up much more than $100M.
That being said I don't think Google (who is also an investor in Uber) would - they're mainly looking to license out the software. This is also leading to problems because car companies are realizing how pivotal this is going to be and want to control the entire process rather than be downgraded to a mere OEM.
Granted that might be less common in central Tokyo but it's happen to me several times. Taxis often have a really poor idea of where they're going.
You want any paperwork done, it'll involve a fax. No, scanning and emailing will not work, sorry. No, you can't just bring the paper in, it must arrive via the fax machine.
Japanese websites: https://randomwire.com/why-japanese-web-design-is-so-differe...
Etc.
Japan: "Please start driving towards <famous landmark>. You know that convenience store near there? Yeah that's the one, can you take me there for starters. OK, now still continue a bit forward. Now turn right in the next intersection. Yes, right here, next take a left..."
For me, this is what's so scary about Uber. It's not "disruption" as many people seem to claim. It's engineered regulatory capture.
The goal isn't to disrupt a market, but rather to wipe it out and have the financial and political backing to secure some sort of regulatory environment in which lower-priced options cannot emerge after the VC-subsidy phase ends and the monopolistic price increases begin.
It's double sad that as the sort of flagship start-up of the era, Uber leads the way in deplorable executive behavior, shady business practices, and questionable labor policies ... and despite it, they've managed to win the PR war that has every naive tech youngster singing about how they are "disruptive" and singing how all criticisms against them are invalid because of precious, precious "disruption."
Even if they figure out some onerous legal contract that forces drivers to work exclusively for Uber, other drivers will sign up for a company that charges consumers less and pays drivers more.
They get praise for their logistics expertise, but advanced routefinding using digital maps is literally a commodity (you can pay ~$0 for a route from lots of companies).
>All of the reasons why cabs exist can be served by Uber better and cheaper.
I don't necessarily agree here, because Uber always has to have drivers standing by. If usage in the area isn't high, average people won't become reliable drivers because their app will usually be empty and they'll give up. Thus, Uber would probably be more efficient if they paid the same small subset of people to be available at set intervals, and at that point, what's the difference between Uber and a typical cab company?
In markets that aren't hot enough to get normal people in the driver pool, Uber may do better just to open their platform to local cab companies.
What's striking about the Amazon/brick&mortar comparison is that retailers' senior management did recognize Amazon early as a fundamental threat. (For example, Walmart.com came to life in 2000 and was set up in the Bay Area with plenty of love from the Walton family.) But on an operating level, few retailers' managers wanted to change the business rapidly enough to deal with it.
They fell into the Kodak trap of sticking with the old ways for a few more years of higher margins ... and thus building out online versions that were way too timid and deferential to make it big.
For example: limited supply of hot items? Put them in the physical stores, not the online one. Price war online? Can't compete, because it might mean undercutting the retail-store price and hurting high-margin sales.
It will be interesting to see if the car companies are able to build out new transport platforms that succeed by making life much worse for their existing dealerships. If so, they can give Uber a run for its money. If not, they will compete in slow motion.
Some did, many didn't. A number of retailers outsourced their branded online presence to Amazon until fairly late in the game instead of building their own capacity, even in the market Amazon was by others earliest recognized as a threat in (e.g., Borders did so until 2007. Target, IIRC, did as well for quite a while.)
But they are losing money because they are selling their product for less than it costs them.
Looking at Amazon's Q1 2016 Financial Results [1], page 8, we see that net sales of non-AWS amounts to ~$26B, and AWS is ~$2.5B. From the Segment Highlights section (same page), AWS sales is 9% of total sales. AWS beats non-AWS income only because there were losses in international; ignoring international, it's a $16m difference. Looking at page 14, Media sales in North America and International sum to $5.6B. Media sales alone is double AWS's sales of $2.5B (page 13). Profit margins are way higher for AWS, so there's still a lot of room for a larger income difference between the two segments.
[0] https://news.ycombinator.com/item?id=11951577
[1] http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9N...
Retail Profits = (702 (Domestic) + (- 135) (International)) < 718 (AWS)
Amazon made more money on AWS than their retail side.
My concern is that Uber is already considered "expensive" by customers, and that's at a massively subsidized rate - how will customers react when Uber wins the price war, destroys the competition, and then has to actually raise prices? and not just raise prices to break even, and not just to make a profit, and not just to grow the currently non-existent fleet of physical vehicles (self-driving or not), but to also make back the US$billions lost to win the war of attrition?
I doubt Uber is trying to run those cars with only one passenger at a time.
Uber also fought against thorough background check legislation in texas if I remember correctly.
There are tons of other regulatory issues like insurance.
I'd be opposed to adding additional regulation if not needed.
But at some point there's got to be a limit to the tolerance of investors.
They are waiting for self driving cars to arrive. Not building it themselves.
Once someone does all the hardwork, they just want to buy and use them.
Not going to happen any time soon.
I think this is the key here. Network effects are powerful, but are highly contingent on switching costs. It costs drivers and passengers next to nothing to switch between providers. A relationship between driver and passenger only exists for a single ride.
By contrast, look at Facebook's network effect. The switching cost to obtain a comparable service is talking all your friends and elderly relatives into Something New. Hence G+ making roughly zero gain against the Book.
I bounce around between the two based on whoever gave me a discount.
The reality of the economics is likely different but that's how it works in theory. Now they are likely paying drivers to be out looking for rides to ensure that service isn't disrupted, and yes they need to subsidize that as others are mentioning.
Transportation is a service, not a physical consumer product. Google has plenty of consumer services (including some "meatspace" services, like Google Express) that have garnered them loyal customers.
EDIT: But perhaps most relevantly to competing with or commoditizing Uber, Google has Google Maps, which not only has a huge user base, but already has a ridesharing button in it. Now, AFAIK, all that does right now is give an estimated Uber price and a link out to the Uber app -- but its a fairly trivial move for Google either to include their own autonomous car service (if they launch one) or other Uber competitors in that link, and either eat Uber's business directly or at least weaken Uber's moat.
Google maps has added new options to it's ridesharing:"New partners include 99Taxis in Brazil, Ola Cabs in India, Hailo in the U.K. and Spain, mytaxi in Germany and Spain and Gett in the U.K. They will sit alongside listings from Uber,"
Also, don't forget Google now surfacing a notification saying: "would you a half price shared taxi for your predicted route ? click to open Google maps" - sounds like a great way to form new habits for users.
Will their number of rides go to 0? No, of course not. But even if there is no other ride service available, there's still taking public transit, driving yourself, or, you know, not going out to whatever you're going to.
Remember also that even if Uber fully defeats Lyft and Lyft's service shuts down, there are plenty of companies out there better capitalized than Uber itself is. Those companies have so far decided to stay out of a "lose $2b per year" business, but if Uber can demonstrate that this is a "gain $2b per year" business, then Google, Amazon, one of the car companies, maaaaybe Apple, and probably a bunch of other companies can at that point launch their own service.
No worries, Uber is working on that:
http://www.bloomberg.com/news/articles/2016-08-15/uber-and-l...
The idea of ridesharing being a profitable activity is an assumption.
Don't worry, they'll make it up in volume!
If someone pukes in the car, it's out of service for the rest of the day.
The service staff may have more to do then cleaning, and even without major events like "someone puked in the back", a large fleet is going to have a continuous, ongoing level of cleaning and care needs (much of which, while needed on an ongoing basis, can easily be deferred when a puking, etc., incident occurs to focus on that.)
So its quite likely that there will, at least in major markets, be work for a 24/7 service staff that also handles puke-like incidents.
By the time full scale driving AI arrives. I'm sure we will have decently capable robots who can clean this kind of thing.
Well, they obviously need someplace to park the cars, and the cars obviously need to get charged periodically (which is likely to require human intervention), and it may be useful to have in-house service capacity. But a combination of internal monitoring systems to detect cabin issues that require a stop for cleaning, and stops for charging and service (that can also be leveraged for in-person cabin and exterior cosmetic inspections) seems to address this, and may require less cost and less risk of forces outside the company's control than relying on individual owners.
Legality hasn't exactly been a problem to Uber's expansion. Why would this particular situation be different?
In quite a few countries, taxi rules are governed by cities - so the municipality government is the enemy.
Anti-monopoly/ predatory pricing rules are at least national level - and if you are unlucky you can go against the EU itself, which historically has not been afraid to slap companies with gargantuan fines that would never be allowed from the pro-business USA SC.
This is well above any fine from the EU.
Uber might feel that the risk-reward ratio is not good enough here to be acting in bad faith.
Programming in itself is relatively easy to abstract from English, as math is a universal language. If you write it enough times, "print" and other commands are just concepts.
Where the language barrier rears its head is in documentation. All those countless hours we save with Stack Overflow is something a Japanese developer frankly can't leverage. Even basic documentation is lacking. Python and many other languages don't have a Japanese version of it's documentation. Ruby is the best supported language there.
Also, from a capital perspective the utilization from 2-5 AM is going to be terrible. Taking peak demand into consideration you probably average ~6-15 hours per day per car anyway.
> For one contract, in July 2000, Enron and Blockbuster Video signed a 20-year agreement to introduce on-demand entertainment to various U.S. cities by year-end. After several pilot projects, Enron recognized estimated profits of more than $110 million from the deal, even though analysts questioned the technical viability and market demand of the service. When the network failed to work, Blockbuster withdrew from the contract. Enron continued to recognize future profits, even though the deal resulted in a loss.
https://en.wikipedia.org/wiki/Enron_scandal#Mark-to-market_a...
In other words, Enron-esque.
This seems to suggest that everything else was taken into account in the profitability calculations, but a little skepticism does seem in order!
For example, did you know that it wasn't until sometime in the last couple years that South Korea implemented a standardized address system? You can't tell a taxi driver to go to an "address" cuz the address of your hotel didn't exist a couple years ago, even if the hotel did, so you have to tell them the closest landmark.
I have a friend living in a small town in Japan that can't get mail at his apartment because the building doesn't have an address. He has his mail delivered to the closest building that does have an address, and they give it to him.
That's because Japan doesn't generally use street-based addressing, it's area-based from top to bottom, so street names are replaced by block numbers (I guess small villages could be blockless and jump directly from village to building as well).
- How much is 1+1?
Correct answer: Whatever you want it to be.
Unlike what the other commenter said... there are plenty of historical examples.
> The most notorious of the trusts were the Sugar Trust, the Whisky Trust, the Cordage Trust, the Beef Trust, the Tobacco Trust, John D. Rockefeller's Oil Trust (Standard Oil of New Jersey), and J. P. Morgan's Steel Trust (U.S. Steel Corporation).
Some dominant companies of course emerged in that era, but I'd be interested to see evidence that companies that weren't insulated from competition by government policies actually used their dominance to harm consumers.
I could see something like this being an interesting This American Life story.
Hotels, Transportation etc.
Why do you think it costs Uber $1.2 billion in losses just to survive?
Then a little thing called the "GPS" was invented. Uber takes advantage of the GPS and anybody can now plot a course to anywhere without specialist knowledge of a city.
The strange thing is, people seem to have forgotten what life was like before GPS.
The day that ends, it will be back to business.
Think of Uber as a taxi company subsidizing your travel for a few years. Things will be back to normal once the VC realizes they can't make profits until they charge customers like other taxi companies.
Rockefeller Oil, J.P. Morgan Steel / US Steel, Tobacco Trust, etc. etc. These companies monopolized the industry in the late 1800s and fixed-prices to kill competitors.
In Vienna (Austria), taxi drivers had to pass a pretty tough exam which required intimate knowledge of the cities streets.
A good driver still makes a difference in the age of GPS, because you can often safe quite some time by avoiding certain points of congestion and factoring in traffic.
But with GPS that incorporates (live) traffic data, the additional value is a lot smaller.
One example was (and maybe still is), to ban discounts on textbooks, as the big margins were a big reason small bookstores stayed afloat.
Another was is to limit hours of operations in stores, including making stores be closed on sunday being mandatory, as many family retailers just couldn't man the store without hiring someone, and labor laws made hiring someone for little time expensive.
There was also a semi-recent outcry when the government stopped regulating rent hikes. for commercial property. There were plenty of stores in highly desirable locations that were on the same lease for a century! Their monthly rent could be two orders of magnitude away from the space next door.
Such level of protectionism of old business models just means that instead of going through pain and optimization for decades, they all get wiped off the map in one fell swoop the minute competition that can skirt the protectionist regulations comes in: Imagine what happens to tiny stores when, instead of first having to compete with US levels of efficiency in big box stores, they get to compete with Amazon. What happens to record stores that can get away with selling music for 25+ euros an album when spotify shows up?
So, while there is reason in fearing monopolies, the levels of regulation I describe just have little to do with what the US calls anti monopoly regulation.
By the way, according to the article, Uber is roughly breaking even in the US (lost some money last quarter, made money the quarter before).
Nothing special about ISPs.
See Phone Service and Electricity.
Also, the fact that some companies became very dominant doesn't mean ipso facto that they harmed consumers. If a company becomes huge fair and square (as opposed to via regulatory capture or other coercive means), it may just mean that people like their product the best.
Those didn't exist in the 1800s. The rise of the corporation occurred after the 1830s, when Congress no longer had to approve of every single company's existence.
After that, it was Laissez-faire economics for over 50 years. https://en.wikipedia.org/wiki/Laissez-faire ... basically ending with the Sherman Anti-Trust Act when Americans realized that was a bad idea.
http://ncpedia.org/united-states-v-american-tobacco-co
> protected by tariffs
Globalization wasn't a big thing in the 1800s. US Companies basically only had to worry about other US Companies. There was some foreign trade, but not much.
Within the US, a major entity like the Tobacco Trust had the power to set prices. When you're the only company in the entire US, you have the ability to stomp out competition like that.
The issue with natural-monopolies is that when one company starts serving a neighborhood, it makes no sense for a 2nd company to start serving the same neighborhood. That's just wasteful.
So there are huge amounts of Verizon-only neighborhoods or Comcast-only neighborhoods out there.
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Other countries solve this by highly regulating the "natural monopoly" part. IE: If you are going to lay wires to a neighborhood, you become subject to strict regulations. (Ex: utility).
Then, they force you to provide multiple choices. The deregulation of power companies for example allows me to pick a blend-of-energy, or I can pay a little bit more for clean energy providers.
Similarly, if we turn Comcast into a government-regulated utility (aka: accept the fact that it will always monopolize a neighborhood), and then force it to supply multiple ISPs in its pipes, things would probably get better.
My county actually has this deregulation, but it doesn't seem to work in practice because Comcast is both cheaper and got better customer service than the other ISPs that run on Comcast's networks.
Arguably, it forces Comcast to have better customer service. Because they're actually competing in my area. I actually go with Verizon in my neighborhood though.